Summary: President Bush on July 30 signed into law a massive bill to help stem the rising tide of foreclosures and shore up housing giants Fannie Mae and Freddie Mac. The bill, the American Housing Rescue and Foreclosure Prevention Act (H.R. 3221), includes several provisions advocated by the AIA and other organizations to promote the design, construction, and rehabilitation of affordable and energy efficient housing.

The legislation, which Congress had approved a week earlier, is designed to address the growing number of home foreclosures due to the subprime mortgage crisis and fears that Fannie Mae and Freddie Mac (which combined hold $5 trillion of the nation’s $12 trillion in mortgages) were sliding towards insolvency. The bill’s backers say that it will help keep nearly half a million homeowners out of foreclosure and will restore confidence and stability in the housing market. But opponents of the bill say that it is a bail-out of reckless lenders and borrowers and that it won’t solve the underlying problems in the housing system.

President Bush initially expressed opposition to the bill, but decided to sign it on advice of Treasury Secretary Henry Paulson, particularly as Freddie Mac’s and Fannie Mae’s woes mounted.

According to Andrew Goldberg, Assoc. AIA, senior director for AIA Federal Relations: “The question for Congress and the White House was not whether they would write a housing relief bill, but how big would it be and how far would it reach. With daily headlines about people losing their homes, and with Election Day only four months away, everyone knew that Washington had to act.”

Among other provisions, the bill will:

• Provide mortgage refinancing assistance to at least 400,000 families
• Create financial counseling and legal assistance programs for homeowners at risk of foreclosure
• Give the secretary of the Treasury the authority to increase an existing line of credit to Freddie Mac and Fannie Mae for the next 18 months, as well as giving the Treasury Department standby authority to buy stock in those companies to provide confidence in them and stabilize housing finance markets
• Provide $4 billion in emergency assistance to communities to purchase foreclosed homes, at a discount, and rehabilitate or redevelop the homes to stabilize neighborhoods and stem significant losses in home values of neighboring homes
• Establish improved mortgage disclosure requirements that will help ensure that borrowers understand their mortgage loan terms
• Provide $15 billion in tax benefits, including tax credits to first-time homebuyers, a real property tax deduction for non-itemizers, an additional $11 billion in mortgage revenue bonds for states, and improved access to low-income housing.

AIA pushes to promote affordable, green housing
In the final bill, Congress included numerous proposals long advocated by the AIA to expand affordable housing and improve energy efficiency of homes. The legislation includes several provisions to encourage the revitalization of historic properties into affordable housing. These proposals are based on those in legislation, the Community Restoration and Revitalization Act, introduced by Reps. Stephanie Tubbs Jones (D-Ohio) and Phil English (R-Pa.), that the AIA—along with the National Trust for Historic Preservation—has supported for several years.

“The Tubbs Jones-English bill is one we have championed for years,” said Tom Bergan, manager of Federal Legislative Affairs, “including at our Grassroots conferences in 2003 and 2004. We are gratified that Congress has included several of this bill’s provisions into the housing package.”

The housing bill also creates a new permanent affordable housing trust fund—financed by Fannie Mae and Freddie Mac—to support the design, construction, maintenance, and preservation of affordable rental housing for low- and very-low-income individuals and families nationwide in both rural and urban areas. The AIA has supported legislation to create such a fund with its partners in the affordable housing industry.

In addition, the housing bill will develop a program to increase awareness of energy efficiency mortgages (EEMs) among consumers, lenders, and real estate professionals. The AIA has advocated for increased consumer awareness of EEMs. “Rising energy prices are yet another factor that hurts families financially,” said Goldberg. “Energy efficiency mortgages are a sensible way to help homeowners pay for upgrades to their homes that will save them money on heating and cooling bills in the long run.”